If a Firm with a 20 Percent Market Share Merges

question 179

Multiple Choice

If a firm with a 20 percent market share merges with a firm with 5 percent of the market, by how much will the Herfindahl index change? The other firms have 40 percent, 15 percent, 10 percent, and 10 percent shares.

• A)It rises by 100.
• B)It rises by 200.
• C)It falls by 100.
• D)It falls by 200.
• E)It rises by 25.

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